New York-based Morgan Stanley will pay $41 a share for Barra, the companies said, representing a 9% premium based on Barra's closing share price Monday of $37.63.

"Barra was one of the first guys who developed modern portfolio theory," said Richard Bove, an analyst at Hoefer & Arnett Inc. in Pinellas Park, Fla. "Thirty years ago, they were a market leader."

Barra is selling after Chief Executive Kamal Duggirala announced in November that he would step down to attend to the illness of a family member.

"We always have been interested in Barra and have always had admiration and respect for their products and management," said Henry Fernandez, president and CEO of Morgan Stanley Capital International Inc. "When Kamal announced he was stepping down because of a family illness, we used that opportunity to talk to Barra management and the Barra board."

Morgan Stanley is buying Barra as consolidation in the asset management industry has caused the company to lose clients, said Christopher Bonavico of Transamerica Investment Management.

A Barra spokeswoman was not available to comment.

Morgan Stanley said it would combine Barra with MSCI, part of its institutional securities division, which also houses equity sales and trading. MSCI and Barra create stock indexes that institutional portfolio managers use to trade against. Barra also works with Standard & Poor's on its indexes of growth and value stocks.

Barra is the leader in software that helps managers understand the risks in their portfolios, said Jeff Hershey, an analyst at Awad Asset Management in New York, which owns shares of Barra.

In its fiscal third quarter ended Dec. 31, Barra reported net income of $8.7 million, or 43 cents a share, on revenue of $38.2 million, both from continuing operations, and had more than $200 million of cash and investments on its balance sheet. It said it has more than 8,500 paying clients and employs more than 500 people.

Barra shares rose $3.13, or 8.3%, to $40.76 on Nasdaq. Morgan Stanley rose 60 cents to $56.95 on the New York Stock Exchange.